Strengthening FDI and SME Linkages in Portugal

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This report assesses the enabling conditions for maximising the benefits of foreign direct investment (FDI) on SME productivity and innovation in Portugal. It looks at the quality of investment that Portugal attracts and the capacity of Portuguese SMEs to benefit from any knowledge and technology spillovers resulting from these investments. It studies the extent to which FDI-SME spillovers occur through value chain linkages, strategic partnerships, labour mobility, competition and imitation effects. The report provides an overview of Portuguese public institutions responsible for investment, SMEs, innovation and regional development policies, taking a close look at arrangements to ensure multi-level policy coordination, stakeholder consultation and evaluation of policy impacts. It then reviews the mix of government policies that are currently in place to support FDI-SME linkages and spillovers, noting areas for further policy reforms. The last chapter introduces a regional lens, focusing in particular on the regions of Norte and Alentejo. This report is part of a broader European Commission-OECD programme on strengthening FDI-SME linkages and serves as a pilot for future country assessments.


Applying a regional lens

In a world with increasingly fragmented production lines, multinational firms do not just choose countries, they select regions. Business activity and performance are also unevenly distributed within countries. As such, policies to strengthen productivity and innovation spillovers from international investments on domestic firms cannot be space blind. The regions of Alentejo and Norte are used as examples to point out how much variation can be found within a country and what can be done when developing polices and institutional frameworks to support such spillovers, including the role of subnational governments.


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